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The main advantage of using trucking companies is that they can transport goods less expensively than their customers, while allowing those accounts to focus on their core business, whether it be retailing or manufacturing. Taking that argument one step further, Wal-Mart (WMT – Free Analyst Report), with about 2,800 domestic big-box stores and 600 Sam’s Clubs, is proposing that it can more efficiently handle shipments from its suppliers, freeing them up to concentrate on their main business. At the same time, Wal-Mart hopes to lower prices by getting concessions from the suppliers.

In the past, suppliers made deliveries to one or more of Wal-Mart’s approximately 150 distribution centers and the retailer took it from there. Wal-Mart now wants to handle shipments all the way from the manufacturer’s (or wholesaler’s) door.

The plan makes sense in a few ways. Better utilization of Wal-Mart’s 7,200 tractors, 53,000 trailers, and 8,000 drivers may be possible. The sheer size of the retailer also gives it more negotiating power for purchases of equipment and fuel. And, since nobody is closer to the inventory tracking, Wal-Mart should be able to improve a just-in-time delivery system.

For the supplier, though, the shift will mean being stuck with excess transportation capacity, and increased costs on deliveries to its other customers.  But we think adjustments can be made rather easily. After all, the aftermarket for trucking equipment is highly liquid and tractors don’t have a long shelf life anyway. In fact, a consumer-goods manufacturer may want to convince other customers, say a Costco (COST), Home Depot (HD – Free Analyst Report), or Target (TGT), to follow Wal-Mart’s lead. Getting out of the transportation business altogether may be a very good thing, indeed.

For the large independent transportation companies, we think Wal-Mart’s move is neutral at worst. The retailer will likely contract out for some of the services it takes over from its small to mid-sized suppliers. This could be good news for trucker and intermodal (a shipment that moves to destination on more than one form of carrier) provider J.B. Hunt (JBHT), which derived 8% of its revenue from Wal-Mart last year. Too, shipping arrangements with large consumer-goods companies, such as Proctor & Gamble (PG – Free Analyst Report) are not likely to change very much.

More and more goods found on retailer shelves come from overseas, especially from China. These are usually shipped on ocean going vessels to North American ports and, from there, moved by rail or truck. The Class I railroads such as Union Pacific (UNP), with costly infrastructures already in place, should continue to handle cross-country and long-distance loads from the sea ports.

Also in favor of independent carriers is the fact that freight management for large companies can become very complex. The major truckers and railroaders have spent lots of time and money developing sophisticated computer models and other tools to best (most efficiently) plan the transportation network. Many, in fact, have separate logistics divisions that often contract out freight movements for the fastest or least expensive service, even if the winner is not a sister company.

One potential drawback for truckers in Wal-Mart’s decision is the creation of excess capacity. One of the retailer’s motives, after all, is improved utilization of its fleet. This means added overall truck capacity, if not a truck bearing the Wal-Mart name, then the logo of a supplier. Added capacity could pressure freight rates and the price of used equipment (not good for the seller, and large truckers don’t hold on to tractors very long).

All in all, though noteworthy, we would not base an investment decision in the transportation sector solely on Wal-Mart’s efforts to save money on logistics. Ultimately, freight rates and transportation industry profits will be determined by supply and economic growth. Now that’s something to worry about. As for Wal-Mart, it proves once again that it is the leader in retail innovation and cost control.